Great Lakes Packing has two bond issues outstanding. The first issue has a coupon rate of 3.76 percent, a par value of $1,000 per bond, matures in 3 years, has a total face value of $4.9 million, and is quoted at 108 percent of face value. The second issue has a coupon rate of 6.53 percent, a par value of $1,000 per bond, matures in 17 years, has a total face value of $9.2 million, and is quoted at 105 percent of face value. Both bonds pay interest semiannually. The company's tax rate is 35 percent. What is the firm's weighted average aftertax cost of debt?

3.03%

4.28%

2.55%

3.53%

2.31%

Based on market values, Gubler's Gym has an equity multiplier of 1.50 times. Shareholders require a return of 11.07 percent on the company's stock and a pretax return of 4.88 percent on the company's debt. The company is evaluating a new project that has the same risk as the company itself. The project will generate annual aftertax cash flows of $285,000 per year for 7 years. The tax rate is 40 percent. What is the most the company would be willing to spend today on the project?

$1,434,071

$1,346,661

$1,465,920

$1,393,097

$1,648,304